lecture 3:

OPERATIOTIONAL AND STRATEGIC MANAGEMENT

KTT Antti Ainamo

Academy of Finland

and

Helsinki School of Economics and Business Administration

Department of Management

S-72.124 Product Development of

Telecommunication systems

HUT PD 270300 / Antti Ainamo

2

Material on which talk is based Product design and development

Sakakakibara, K., Lindholm, C. & Ainamo, A. (1995): Product Development in Emerging Product Markets: The Case of Personal Digital Assistants (PDAs)”, Business Strategy Review.

Ainamo, A. (1999): ”Strategic Product Planning”. Hallinnon tutkimus. Ainamo, A. & Pantzar, M. (forthcoming): ”Design for the Information Society: Learning

from the Nokia Experience”. Design Journal.

New organizational forms and strategy Djelic, ML & Ainamo, A. (1999): ”The Coevolution of New Organization Forms in the

Fashion Industry: A Historical and and Comparative Study of France, Italy and the USA”. Organization Science, Special Issue on Strategic and New Organizational Forms, September-October

Ainamo, & Djelic (forthcoming): ”Image-and-Communication Portfolios”, Strategic Management Society, submitted.

Pantzar, M. & Ainamo, A. (forthcoming): ”Dynamic conservatism: a comparison of Ford, GM, Motorola and Nokia”, EGOS

Case studies: electronics, computing, mobile telecommunications


3

Outline

Management: operational and strategic A stages model of product development A matrix of products and systems Product development disciplines How to manage product development

(Ainamo 1999a, 1999b)


4

The Need for Management

Different kinds of disciplines Engineering Marketing Industrial design and graphic design The humanities

Resistance to change Turbulence in the competitive landscape The customer values ”quality” (the whole)

(Ainamo 1999a, 1999b)


5

Management

Different ways to integrate and coordinate Operational management Strategic management

Coping with change resistance win-lose win-win

Attitudes to turbulence Adapt Strategic choice Shaping of the environment

(Ainamo 1999a, 1999b)


6

Operational management

Implementation Staying within given boundaries or constraints Incrementalism

Personal Digital Assistants, early 1990s, Japanese Fujitsu

(Ainamo 1999a, 1999b)


7

Strategic management

The management of the general” Creating and changing boundaries Radical (re)positioning of the business

Personal Digital Assistants, Apple Newton


8

PD Stages and Roles

A stages model Design Technical product engineering Production planning Marketing planning

Different kinds of products Simple Complex Modular Interface

(Ainamo 1999a, 1999b)

A stages model of product development

(Ainamo 1999, s. 147)

Design Product Production Marketing engineering planning planning

Concept Product and/or Production Commercializationsystem capacity

(see also 1999b, 327)


10

Design

Conceptualizing new products The current state Ideal states Conceptualization: bridging the gap

Refining concepts Drawings Mock-ups Prototypes

(Ainamo 1999a, 1999b)


11

Technical product product engineering

Product architecture Product platform Product generations and product families

(Ainamo 1999a, 1999b)


12

Product architecture

Architecture Concept Component Links

To concept: function To user: interface

(Ainamo 1999a, 1999b)


13

Product platform

The central component or module in the architecture

Link between design, production and marketing Faster Cheaper ’Better’

(Ainamo 1999a, 1999b)


14

Product generations and product families

Product generation Products following a historic technical

choice or theme Technical implications ”Historic” – analysis of products across

time Product family

Variations on the theme Marketing implications Synthesis of current products

(Ainamo 1999a, 1999b)


15

Production planning and marketing

Production capability and productization Commercialization and logistics

(Ainamo 1999a, 1999b)


16

Four kinds of products or systems

Complex Simple Interface Modular

(Ainamo 1999a, 1999b)


17

A product that is a complex system...

is challenging to develop is challenging for the user Necessitates to calm down / educate

’distressedä user Multidisciplinary teams

(Ainamo 1999a, 1999b)


18

What is complexity?

Systems consist of ’subsystems’ (parts, components, modules)

Subsystems have dense internal relationships

Relatively few external relationships Complex systems

Many subsystems Many relationships between subsystems ’Nonsimple’ relationships

(Ainamo 1999a, 1999b)


19

Managing complexity

Break down complex systems into simple (sub)systems

Manage each subsystem separately Manage the system of subsystems as a

whole


20

A product that is simple...

is technically easy to handle is easy to use for the user can be ”boring” for the user (!) introduces need to make product ”exciting” Marketing

(Ainamo 1999a, 1999b)


21

A product that is subsystem-driven...

is difficult to develop in part has a product form that is stable has all depend on one technical subsystem Product engineering of the critical subsystem

(Ainamo 1999a, 1999b)


22

A product that is an interface product...

Subsystems exist... but their links challenge (potential) usability The goal: increase user-friendliness Design

(Ainamo 1999a, 1999b)


23

Functionality, meaningfulness, and user-friendliness

Functionality Designed concept translated into technical

language Product engineering (and design) critical

Meaningfulness Functionality translated into marketing language Marketing (and design) critical

User friendliness Functionality translated into the language of the

end-user Design (and product engineering and marketing)

critical (Ainamo 1999a, 1999b)

Find role for each type of product

Quality in the eyes of the customer, the product concept, product types and the order of priority ofthe stages of the product development process (Ainamo 1999a, s. 153, 199b, 331).

QUALITY IN THE EYES OFTHE CUSTOMER

Difficult to achieve Easy to achieve

Difficult COMPLEX PRODUCT (for ex. MODULAR PRODUCTairplane, telecom system ) (for ex. a drill)Multidisciplinary Product engineering and

CHANGING production planningPRODUCTCONCEPT Interface product (for ex. Simple product (for ex.

consumer electronics, software) convenience good, classic Beetle)Easy Design Marketing


25

Mobile phones

1st Generation analog phones Complex systems Productl engineering

2nd Generation digital phones Once systems in place, both 1st and 2nd G were

simple products Marketing

3rd G smart phones, communicators etc. All subsystems exist Design of usability and user-friendliness critical

Ainamo & Pantzar (2000)


26

1G, 2G, 3G and the three discliplines

1st G From complexity towards simplicity PRODUCT ENGINEERING: product architecture

2nd G From simplicity towards marketing and segmentation MARKETING: product families: new product

forms,features and subsystems 3rd G

From segmentation towards lifestyle design DESIGN AND REAL-TIME MARKETING: Integration

of technologies into new interfaces



27

Trends in product development

Need for new product development methodologies

’Hero designers’ rare (Bell, 1999) Product developement is multidisciplinary Strategic organization design Organization design more important than product

development Interaction

”Incorrect” use of products Learning Flexibility and customization



28

Product development strategy:Lessons from the fashion industry

Organization forms: lLessons from the fashion industry (input)

Changing ideas and techniques (process)

Brands (output)

(Ainamo 1999a, 1999b) Ks. myös Ainamo, A. (1999c): Fashion as Strategy: Ideas and Techniques about organizing in the Fashion Industry as a Model for Stategy. Invited Paper and Presentation at INCAE, San Jose, Costa Rica, Aug. 31. Hosts: N. Phillips and P. Martin de Holan.


29

Product development fashions

New fashionable ideas and techniques ”Transitory collective beliefs” (Abrahamsson, 1996)

”Useful error” (Huczynski, 1996)

Learning by failure an important part of learning

Reinterpretation of failure Interventions Reframing failure Consistency or shift


30

Product development personnel: Commitment and building commitment

Commitment of PD personnel Loose link to business results Interpretation of results based on beliefs and

values

(”social construction”) Doing at the forefront (”tacit knowledge”)

Building commitment The ideal and and (current) constraints Learn and develop language and communication Link results and doing

(Ainamo 1999a, 1999b, 2000)


31

Strategic management of PD

Strategic management is communication The constraints The ideal Linking the two

”People busines” Develop common language Understand subordinates but don’t overdo it Treat tensions Explicit or tacit interventions

Management Funding and support Learning and innovation Link with market development & industry analysis


32

Knowledge management ja oppiminen

All knowledge is not explicit – it is ”silent” (tacit knowledge; Nonaka 1994)

New knowledge builds on the old, when there is success (March & Simon 1958)

(Ainamo 1999a, 1999b, 2000)


33

Summary: Management and product development

Operational and strategic management Need to integrate different kinds of

competences Turbulence Resistance to change

(Ainamo 1999a, 1999b)


34

Turbulence

New products are ”revolutionary” Markets are reactionary

Revolution does not happen Change is slow Change is difficult to predict

Change Partial or temporary Sudden shift into a new standard

Rhetoric and reality ”Revolution” and design are rhetoric Evolution and a random process are reality

(Ainamo 1999a, 1999b, 2000)


35

Dealing with resistance to change

Question current model New ideal Reset organizational boundaries Feed short-term results into process ’Make’ results if you need to

Motivation Momentum

(Ainamo & Pantzar 2000)


36Product development and

interorganizational networks Product development does not happen only

within the organization Interorganizational networking – between market

and organizational hierarchy Need for trust, the ”glue” between organizations Trust and networking are contingent phenomena

(”it depends”) Japan: keiretsu Finland: government and technology

(Ainamo 1999a, 1999b, 2000)


37

Interorganizational networks: the fashion industry

Interorganizational networking is ’global’ only on a high level or abstraction

Trust is the ”glue” The basis of trust differs from one country to

the next France: regulation Italy: socially embedded flexible networks The U.S.A: the virtual organization Interorganizational networking differs from

one country to the next


38

Intraorganization network: IBM ThinkPad

Early 1990s Parallel projects

USA Italy Japan

Japanese ”bento box” became the global choice


39

Product engineering: the Sony Walkman

Several technologies A small portable dictaphone Ear phones


40

”Product development” or ”product planning”?

Definitions differ ’Product planning includesonly

productization and commercialization (ks. esim.

Ainamo, 1999a,b)

’PD includes only design and technical product engineering’

’Also production planning is included’ ’Also marketing is included’

lecture 3:

Business

product design

product development

product families ainamo

interface product

product form

strategic product planning

logistics ainamo

environment ainamo